Vodafone Idea runs risk of losing high quality users in absence of 5G

Vodafone Idea, which has been losing subscribers continuously for 19 months now, runs the risk of losing high quality consumers in the next 6-7 months in the absence of 5G launch, several analysts FE spoke to, said. Analysts said that the company might soon see a churn in its 4G subscribers on a net-to-net basis as well, once rivals Bharti Airtel and Reliance Jio completely extend 5G to metros and other top circles.

In the 19 months till October, the telecom operator has lost about 38.1 million mobile subscribers, which is significantly higher compared to Reliance Jio which lost 1.5 million users owing to cleaning of inactive subscriber base, and Bharti Airtel which added 12.6 million users.

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According to industry experts, the upcoming cycles of subscriber churn for Vodafone Idea might even lead to a fall in its Arpu (average revenue per user) despite tariff hikes. “In the last 19 months, factors like SIM consolidation due to tariff hikes, weak 4G coverage, have contributed negatively for Vodafone Idea,” an analyst with a leading brokerage house said, adding that now high-data users, postpaid users may also start moving to other operators if Vodafone Idea does not launch 5G.

At Rs 128, Vodafone Idea currently has the lowest Arpu per month amongst the private telecom operators. In comparison, Bharti Airtel’s Arpu stands at Rs 190, while that of Jio is Rs 177.2.

“Post the acquisition of 5G spectrum, Vi showcased a wide range of real world 5G use cases for enterprises and consumers…To drive 5G ecosystem development in the country for faster adoption of services, Vi is partnering with leading device OEMs to have Vi 5G provisioned for its users in time for market roll out,” Vodafone Idea told FE in response to a query on subscriber churn and absence of 5G launch thus far.

According to industry experts, the upcoming cycles of subscriber churn for Vodafone Idea might even lead to a fall in its Arpu (average revenue per user) despite tariff hikes. “In the last 19 months, factors like SIM consolidation due to tariff hikes, weak 4G coverage, have contributed negatively for Vodafone Idea,” an analyst with a leading brokerage house said, adding that now high-data users, postpaid users may also start moving to other operators if Vodafone Idea does not launch 5G.

At `131, Vodafone Idea currently has the lowest Arpu per month amongst the private telecom operators. In comparison, Bharti Airtel’s Arpu stands at `190, while that of Jio is `177.2.

“Post the acquisition of 5G spectrum, Vi showcased a wide range of real world 5G use cases for enterprises and consumers…To drive 5G ecosystem development in the country for faster adoption of services, Vi is partnering with leading device OEMs to have Vi 5G provisioned for its users in time for market roll out,” Vodafone Idea told FE in response to a query on subscriber churn and absence of 5G launch thus far.

As on November 26, a total of 20,980 base stations for 5G coverage have been installed in the country across 14 states. Of these, Jio has installed the maximum sites at 17,687 while Airtel has installed 3,293 sites.

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Apart from 5G, in some circles which do not have a good 4G connectivity or presence by Vodafone Idea, its 2G users are migrating to Airtel and Jio for 4G, analysts said.

Out of 22 circles, Vodafone Idea is prioritising 17 circles currently which includes metros, A and B circles. In the C circles, five states including Himachal Pradesh, Orissa, Assam, North East, Jammu and Kashmir are not its focus area.

According to Jefferies, the total wireless subscriber base of Vodafone Idea in urban areas fell 1 million, whereas in rural areas it fell 2.6 million in October. During the month, the telecom operator lost 1.3 million subscribers in A circles, 1.9 million subscribers in B circles and 0.4 million subscribers in C circles.

As of October end, the company has 123.36 million 4G subscribers, compared to 222.85 million users of Airtel and 421.38 million users of Jio. In the last 19 months, Vodafone Idea has lost about 0.25 million 4G users, whereas Airtel has added 30.92 million. In October, Airtel added 3 million subscribers, its highest in 14 months, whereas Jio added 1.4 million and Vodafone Idea added 0.2 million subscribers.

Launch of 4G services by BSNL is also expected to further eat into Vodafone Idea’s 4G subscriber market given the government’s focus on the former with a financial relief package, analysts said.